A joint term deposit is a type of savings account typically opened by two people, commonly couples or family members, where a lump sum is invested for a set period at a fixed interest rate. A joint term deposit allows two people (potentially multiple people, depending on the term deposit provider) to benefit from the investment while sharing responsibility for, and access to, the funds.
Key points covered
- How joint term deposits work
- Opening a joint account
- Interest rates and terms
- Some benefits and considerations
How joint term deposits work
Joint term deposits in Australia work similarly to personal individual term deposits but instead of a single account holder, there are two (or potentially more) account holders.
A joint term deposit allows two people, including couples, family members, or business partners, to combine their principal (initial deposit) into a single account and earn interest on a fixed-term investment jointly.
You’ll usually be offered the same interest rates and term options as you would for term deposits for individuals. Once you lock in a term and principal, the interest rate stays fixed for the whole period (unless you seek to break before maturity), which can be as short as a month or as long as five years, depending on the authorised deposit-taking institution that is your term deposit provider (ADI).
Opening a joint term deposit
Opening a joint term deposit is similar to opening any other term deposit account but involves all parties involved in the joint account.
Once the term deposit is set up, all individuals listed as account holders have equal ownership rights. Depending on your provider, any account holder may be able to give instructions on behalf of all account holders, and all are equally responsible for the account. This is why it’s important to consider who you open a joint account with, and it should be someone you trust.
If a dispute arises, the term deposit provider may require written consent from all joint account holders to any further transactions on the account, or may freeze, suspend or block access to the account until the issue is resolved.
Potential benefits of joint term deposits
Working toward shared goals
One benefit of a joint term deposit is it may help the joint account holders work toward common financial goals. Whether you're a couple saving for a home, family members planning a big purchase, or even business partners building up savings, pooling your money together may speed up the process and help you meet your common objectives.
Easier to manage
With a joint term deposit, you don’t have to worry about keeping track of multiple accounts or splitting contributions across different platforms. Instead, you can see all your progress in one account, making it easier to stay on top of your savings and interest.
Bigger joint principal
By combining your principal in a joint term deposit, you may be able to increase the total amount invested, which can help you earn more interest. This may help you reach your savings goals faster.
Joint term deposit considerations
Opening a joint term deposit can be a smart way to save together, but it’s also a big responsibility. Both account holders have equal access to, and responsibility for, the funds, so it’s important to open a joint account with someone you trust.
Here are some key things you’ll want to agree on
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How much will be deposited? Decide how much each person will contribute upfront.
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Term length. Agree on how long you’re willing to lock away the funds for, whether for a few months or several years, based on your common financial objectives.
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Interest payment frequency. Discuss how often you’d like to receive interest – common payment options include monthly, annually, or at maturity.
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Tax implications. Interest earned is usually split equally between account holders for tax purposes. Each person is responsible for reporting their share of the interest on their individual tax returns, which may impact your tax obligations.
Important Information
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